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Backdating and the New Technology of White Collar Securities Fraud Enforcement


March 20, 2007 6:00pm - 8:30pm


The first of a two-part series on corporate governance offered by the Law School and the Business School will discuss the backdating controversy as an example of the new enforcement techniques being applied by the federal government and explore the profound implications of these techniques for executives and lawyers alike.

While backdating has certainly caught the public eye, the biggest news in the backdating controversy might not be the fact that options were backdated but the techniques that the government has used to investigate corporate backdating.

To date, approximately 200 companies have announced backdating inquiries, and all of these companies have agreed to cooperate with the authorities by sharing the results of their internal investigations. In addition, more than 40 executives have lost their positions while the government has filed criminal and civil actions against only five executives at only two companies, and has taken no action against those two companies themselves.

The result is what Professor Joseph Grundfest describes as a "wave of Maoist self-reflection and self-criticism by corporate America that is consciously calculated to make it easier for the government to prosecute individual executives who have caused corporation to violate the law."